Balancing state budget expenditures: A case of Ukraine using the simplex method

• Main Authors: Inna Shkolnyk, Yuriy Ladyka, Volodymyr Orlov, Khaled Aldiwani, Yevhenii Kozmenko
• Format: Article
• Language: English
• Published: LLC "CPC "Business Perspectives" 2021-07-01
• Series: Public and Municipal Finance
• Subjects: economic and mathematical modeling; index of structural changes; national functions; public finance
• Online Access: https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/15255/PMF_2021_01_Shkolnyk.pdf

The consolidated state budget expenditures reflect the condition of performance by a country of its basic functions and allow defining priority directions for the implementation of state policy. Their optimal ratio allows satisfying the interests of citizens, business and society as a whole, and can provide a significant impetus for economic growth. The analysis of state budget expenditures using the example of Ukraine showed that their structure is unbalanced. Therefore, the purpose of the study was to find the necessary balance. The optimization of Ukraine’s state budget expenditures was carried out using the simplex method based on their structure from 2007 to 2019. Since the priorities of Ukraine’s strategic economic and political development are the implementation of the EU standards and norms, the structure of the EU’s state budget expenditures is chosen as a guideline for determining the optimal structure of expenditures. As a result, it is determined that in order to harmonize the structure of the Ukrainian budget expenditures with the approaches implemented in the European Union, minimal changes in public order spending are required. In addition, significant areas of funding include healthcare, economic activity, social protection and security. At the same time, intergovernmental transfers need to be significantly reduced, the amount of which should be revised after the completion of the financial decentralization reform.